More than half of the 10 investment trusts that became least expensive relative to their net asset value (NAV) over the second quarter (Q2) are related to property, according to fund research company QuotedData.
Property investment trusts exposed to mainstream commercial property, including Schroder Real Estate (SREI), Kennedy Wilson European Real Estate (KWE), F&C Commercial Property (FCPT)*, UK Commercial Property (UKCM) and Standard Life Investments Property Income (SLI)*, experienced substantial discount widening in the wake of the UK's vote to leave the European Union, although these have since tightened.
Value & Income Trust (VIN), meanwhile, which has both a UK equity and UK property portfolio, bucked the trend of widening discounts for funds exposed to property. "Its property portfolio does not feature the sorts of properties that would be owned by institutional or overseas investors, and so is less affected by the referendum result," says Matthew Read, senior analyst at QuotedData.
NB Distressed Debt New Global's (NBDG) share price, meanwhile, hit new lows towards the end of June. The trust, which invests in distressed, stressed and special situations debt, recently reported that liquidity was drying up in these markets and that selling pressure was pushing down prices.
A few trusts experienced a decline in their NAVs due to the vote to leave the European Union, but saw their ratings improve as their share prices did not reflect the NAV falls. These include Small Companies Dividend (SDV), Acorn Income Fund (AIF), which is approximately 80 per cent invested in UK smaller companies, and UK-focused Independent Investment Trust (IIT).
Funds that became more expensive due to discount tightening over the second quarter include Juridica Investments (JIL), which invests in business litigation and arbitration cases. This was because the trust returned capital to shareholders.
Baker Steel Resources (BSRW) benefited from improved sentiment towards commodities and natural resources. However, an improvement in BlackRock Commodities Income's (BRCI) NAV did not fully feed through to its share price, causing it to shift from a premium to a discount.
Renewable energy and broad infrastructure funds such as Greencoat UK Wind (UKW) and HICL Infrastructure (HICL) became relatively more expensive as they found themselves in demand. Mr Read says this may be because they are seen as safe havens.
Least expensive investment trusts relative to NAV at the end of Q2 (%)
| Trust | Discount/premium to NAV as at 31/3/16 | Discount/premium to NAV as at 30/6/16 |
|---|---|---|
| Nimrod Sea Assets | -4.5 | -61.3 |
| Schroder Real Estate | +1.6 | -14.7 |
| Kennedy Wilson Europe Real Estate | -1.7 | -17.1 |
| NB Distressed Debt New Global | -13.1 | -27.7 |
| Macau Property Opportunities | -39 | -52.4 |
| F&C Commercial Property | -3.4 | -16.7 |
| BlackRock Commodities Income | +4.6 | -8.6 |
| UK Commercial Property | -3.2 | -15.4 |
| Standard Life Investments Property Income | +4.3 | -5.4 |
| North Atlantic Smaller Companies | -14.1 | -22.9 |
Source: Morningstar/QuotedData
Most expensive investment trusts relative to NAV at the end of Q2 (%)
| Trust | Discount/premium to NAV as at 31/3/16 | Discount/premium to NAV as at 30/6/16 |
| Juridica | -45 | -25.5 |
| Baker Steel Resources | -52.4 | -38 |
| Small Companies Dividend | -12.9 | +1.2 |
| Acorn Income Fund | -8.5 | +3.1 |
| Value & Income | -25.9 | -14.5 |
| Phaunos Timber | -27.6 | -17.6 |
| Independent Investment Trust | -2.3 | +7.7 |
| Greencoast UK Wind | +2.4 | +12 |
| HICL Infrastructure | +12 | +20.8 |
| Better Capital 2009 | -30.6 | -21.8 |
Source: Morningstar/QuotedData
